Adverse media screening for AML
In the Customer Lifecycle Management (CLM) journey, both customers and related parties undergo Name screening and Adverse media screening. This enables Know Your Customer (KYC) analysts to identify risks and make informed decisions.
The Refinitiv World-Check One Adverse Media API integration enables Pega Client Lifecycle Management and KYC users to easily search, review, and exchange news about adverse media or negative findings on a unified platform. Once enabled, Pega Client Lifecycle Management and KYC users have access to a separate Adverse Media child case, alongside an eScreening case used for Name Screening. These cases run parallel to the main parent case, enabling users to simultaneously handle vital data enrichment tasks. Adverse media screening is conducted during the customer investigation stage for each global KYC case of the related party. This screening helps KYC analysts to identify potential risks, empowering them to make informed decisions based on the findings.
Customer investigation
CLM customer journeys uses the Adverse media case type (ADV-) to perform Adverse media screening of an individual or an organization. The adverse media screening case inherits from the eScreening case, but instead of managing name hits, it manages article hits. As an eScreening case, the KYC Analyst can review and address any article matches returned from the screening provider. The CLM cases trigger the screening process at the following stages:
- Enrich stage: An ADV screening case is created for a contracting party when the CLM case reaches the Enrich stage and enters the Customer Investigation process. The case is triggered only when ADV screening data is unavailable or the available customer screening data has expired.
- Due diligence stage: If the screening is not performed for the contracting party in the Enrich stage or if the screening data has expired, an ADV screening case would be created as part of the Global KYC (GKYC) case in the Customer Due diligence stage. ADV screening cases can also be created for related parties as part of the Global KYC case corresponding to each related party, depending on the financial institution's screening policy.
Adverse media case
Like eScreening cases, Adverse media cases contain the same four stages:
- Data exchange: the World-Check screening service is invoked, and screening results are retrieved. Before invoking the screening service, a check is made to see if the screening results are available in the customer's master profile. If the results are available and are valid -- for example, the screening data is not yet expired -- then the results from the customer's master profile are reused. If they are unavailable, the system creates a new case on World-check and places a screening request. This screening request is asynchronous and is completed based on available resources. Processing times can vary widely, so before retrieving the results, the Adverse media case checks the audit log to see if the screening is complete. If completed and the screening results are unavailable, the system waits one minute before rechecking the audit log. After a successful screening, the results are retrieved from World-Check and populated into the case.
- Investigation: screening results are displayed to the KYC Analyst. The KYC Analyst can open each article and take a detailed look at the content before deciding if this article is relevant or not, and attaching it to the case with an appropriate risk status.
- Synchronization: the screening results are synchronized to the customer'a master profile. The risk assessment and AML CDD profiles logic is re-run, to consider any screening-related risks.
- Resolution: after the relevant articles are attached, a risk assessment is performed to consider the outcome of the resolution.
In the following image, click the + icons to learn about the stages of the Adverse media case:
Investigate articles
If potential articles are found for the customer, then the flow moves to Investigation stage, under which it invokes Investigate Matches process. This process waits until a KYC analyst has reviewed the articles and determined the overall risk status.
In the following image, click the + icons to learn about the Investigate matches assignment window:
Impact on risk
With increasing regulation in the financial industry there is pressure to know customers better, which means determining the individual and organizational anti-money laundering (AML) risk profile of the customer. To do this, financial institutions need a model to understand the risk associated with the customers in their portfolio.
Assessments are made of many factors that will change over time and impact the risk, because the industry needs to have an overall risk assessment of the customer that is available at a glance, in which they can drill down to understand the individual factors of the overall risk.
Risk determined from adverse media screening assessments falls under the External Data risk category. This risk factor is also calculated based on other third-party data, such as:
- ID Verification
- Fraud Check
- Credit Profile
Passed, Warning, NotPassed, and NA are the four values that a name screening assessment can return. Different risk scores are associated with each of these four values, with NotPassed having a high risk score and NA and Passed having a low risk score. The eScreeningAssessment decision table considers the resolution values of the screening matches and returns a value for the screening risk, as in the following figure:
Impact on KYC due diligence
All of the dynamic questionnaires used by the application to support the due diligence functions are powered by the Pega Know Your Customer engine.
The outcome of the adverse media screening is automatically propagated to the relevant Global AML KYC type. Adverse information screening is part of the "Adverse information, Law/Regulatory enforcement and sanctions screening" assessment group.
The following figure shows the questions that are asked as part of KYC Global AML Due Diligence:
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